Best AI Stocks to Buy: SoundHound vs Palantir – Which Offers Greater Growth Potential?

Artificial intelligence (AI) is a top investment trend. It has the potential to change our lives and improve business efficiency. For example, AI can enhance car safety and speed up drug development. This efficiency can lead to higher earnings for companies involved in AI.

Investors who buy AI stocks early may see significant returns. Choosing the right stocks is crucial for long-term success. Two AI stocks that have increased over 200% this year are SoundHound AI (SOUN) and Palantir Technologies (PLTR). If you can only choose one, which is the better option?

The case for SoundHound

SoundHound focuses on voice AI, such as voice assistants used in cars or restaurants. Its technology is unique because it translates speech directly into meaning, making it faster and more accurate than traditional methods.

Recently, SoundHound’s revenue grew by 89% in one quarter, prompting the company to raise its revenue forecast for 2024 to between $82 million and $85 million. Importantly, SoundHound is diversifying its revenue sources. Five sectors now contribute between 5% and 25% to its revenue, compared to the automotive sector, which made up 90% last year.

SoundHound’s total market size is over $140 billion, indicating potential for growth across industries like finance, retail, and healthcare. This suggests that the company still has much more growth ahead.

The case for Palantir

Palantir has traditionally worked with governments, helping them manage their data. Recently, demand from commercial customers has surged, thanks to its new Artificial Intelligence Platform (AIP). This platform assists both government and commercial clients in making data-driven decisions.

Palantir’s revenue growth has improved significantly, rising from 13% to 30% in the past six quarters. The number of U.S. commercial customers has grown from 14 to nearly 300 in four years. The company recently achieved its highest profit ever, and its inclusion in the S&P 500 reflects its strong position in the economy.

Should you buy SoundHound or Palantir?

Both stocks have done well this year, leading to higher valuations. SoundHound is not yet profitable, trading at 34 times its expected sales. Palantir is profitable, trading at over 170 times its expected earnings.

While these figures may seem high, both companies are still growing. If you want to invest, Palantir is the better choice. It is profitable and has great potential for growth, especially in the commercial market. SoundHound and Palantir both have potential, but right now, Palantir stands out as the smarter investment.